Tag: cryptocurrencies

Recent developments such as the Bitcoin futures contracts listings by U.S. exchanges could see lead European banks holding positions in bitcoin.

That’s according to the president of the European Central Bank (ECB).

Speaking earlier this week at a European Parliament meeting, Mario Draghi, chief of the ECB, highlighted the fact that digital currencies such as bitcoin had already been touched upon by other speakers.

Despite interest with the sector on the rise, Draghi noted that the central bank had not observed a holding of digital currencies by banks, adding:

Actually, the credit institutions established in the European Union are showing a limited appetite for digital currencies like bitcoin, notwithstanding the high level of public interest.

Notably, though, the president of the ECB said that this could change given new developments in the market.

However, recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in bitcoin, and therefore we will certainly look at that.

Possibly so as not to appear too pro-bitcoin, Draghi added that as digital currencies are in an unregulated space they should be looked at as ‘very risky assets.’ This is due to their volatility and speculative nature. The chief also referred to the work that is being done in the Single Supervisory Mechanism that aims to identify potential risks that digital assets could pose to banks.

In September, during statements made to the European Parliament’s Committee on Economic and Monetary Affairs, the president of the ECB said that it does not have the power to ‘prohibit and regulate‘ digital currencies such as bitcoin.

He also expressed in November that the impact of the cryptocurrency market was ‘limited‘ and that it doesn’t pose a threat to the ECB.

Draghi’s remarks come at a time when Daniele Nouy, the ECB’s chief supervisor, said yesterday that regulating the cryptocurrency market wasn’t a top priority for them. Good news for the sector as it slowly regains previous highs.

The head of the Bank for International Settlements (BIS) has argued that central banks need to take pro-active measures against cryptocurrencies to prevent them from becoming a ‘threat to financial stability.’

Agustín Carstens, the General Manager of the BIS, said that there was ‘a strong case for policy intervention,’ during his first speech as head of the Swiss-based BIS, reports Reuters.

Cryptocurrencies piggyback on the institutional infrastructure that serves the wider financial system, gaining a semblance of legitimacy from their links to it, he said, speaking at Frankfurt’s Goethe University.

Agustín said that banks have a duty to educate and protect customers and their assets and to be prepared to act.

His comments come at a time of increasing regulatory pressure from global authorities. India has joined China and South Korea with plans to clamp down on certain parts of the market.

Whereas, bans from credit card companies have also seen market prices being impacted. Earlier this month it was reported that JPMorgan, Bank of America, Citigroup, and more recently, Lloyds Banking Group, were prohibiting its customers from buying cryptocurrencies such as bitcoin with credit cards.

As a result of these factors, volatile trading saw the price of bitcoin fall to below $6,000 on Tuesday, having lost around two-thirds of its value when it was within touching distance of $20,000 in December.

The start of 2018 has proven tough for the cryptocurrency market, which has seen its market cap drop from an all-time high of $830 billion to $336 billion, at the time of publishing, according to CoinMarketCap.

Carstens is the latest figure to join the growing list of naysayers against the digital currency market by remarking that:

Bitcoin is not functional as a means of payment, but it relies on the oxygen provided by the connection to standard means of payments and trading apps that link users to conventional bank accounts.

Mario Draghi, the president of the European Central Bank (ECB), said yesterday that digital currencies are unregulated and ‘very risky assets‘ that should be treated with caution, reports the Financial News.

It’s interesting to note that Draghi initially said back in October that cryptocurrencies like bitcoin were not ‘mature‘ enough to regulate. However, while he did say that innovation should be ‘cherished for its potential benefits,’ it should also be ‘critically assessed’ for risks.

Whereas, the U.K.’s Prime Minister Theresa May, said at the recent World Economic Forum in Davos, Switzerland, that she ‘very seriously‘ wants to look into the use of cryptocurrencies due to their potential use in crime.

Hong Kong authorities have said that while they won’t ban the trading of cryptocurrencies, they will educate people on the risks involved instead.

According to the Financial Services and the Treasury Bureau, the public education campaign will highlight that the crypto market is not regulated, is subjected to hacking, and fluctuates in price, reports the South China Morning Post. The campaign is being run together with the Investor Education Centre, a subsidiary of the Securities and Futures Commission.

It’s expected to be rolled out from March via print, digital, and broadcast media in addition to the Mass Transit Railway (MTR) stations, a major public transport network serving Hong Kong.

Joseph Chan Ho-lim, the Treasury’s undersecretary, said that investors in Hong Kong may not know about the risks surrounding cryptocurrencies and initial coin offerings (ICOs).

Julia Leung Fung-yee, executive director of the intermediaries division of the commission, explained by saying:

When we asked some young people why they bought cryptocurrencies, many of them cared less about the projects mentioned in the [ICOs’] White Paper … they just wanted to make quick money by speculating on the cryptocurrency exchange.

Interestingly, while the volatility of the digital currency market remains a concern to policymakers in Hong Kong, that doesn’t mean they’re about to tell investors what they should and shouldn’t invest in.

These comments come at a time when the cryptocurrency market is experiencing heightened attention from traders and authorities concerned about rising prices. At the end of 2017 bitcoin saw its value soar by nearly 2,000 percent before losing half its price at the start of 2018. Speculation that the sector is in a bubble remains; however, this doesn’t appear to have dampened interest in it. Raising funds through ICOs has also increased, which saw crowdsourced fundraising bringing in between $4 billion and $7 billion.

However, unlike Chinese and South Korean authorities, which are cracking down on cryptocurrencies and trading platforms, Hong Kong’s government has indicated that it doesn’t plan to follow suit anytime soon.

One of the measures that authorities have implemented to protect consumers is that ICO issuers are required to follow existing laws and regulations if the coin they are offering falls within the remit of a security or investment.

Yet, according to Leo Weese, chairman of the Hong Kong Bitcoin Association, this is a topic that needs to be talked about.

“We should know the difference between what makes a good ICO [and what doesn’t] and how we differentiate between scams and legitimate projects.”

Cryptocurrencies are now worth more than half a trillion dollars, marking yet another historic milestone in what has already been a year of unprecedented growth for the crypto ecosystem.

Cryptocurrency Market Cap Hits $500 Billion

Since beginning the year at less than $18 billion, the cryptocurrency market cap has exploded to a 2,700 percent gain, and the bulk of that advance has occurred since mid-November when the markets crossed the $200 billion level for the first time.

Source: CoinMarketCap

As a matter of fact, the cryptocurrency market cap had attained the $400 billion mark just six days ago, but its meteoric rise continued during the second week of December. Against this backdrop, the crypto market cap raced past the $500 billion threshold on Tuesday evening at approximately 22:00 UTC.

Altcoins Headline the Advance

Tuesday’s rally was the product of comprehensive market advance. Of the 25 largest cryptocurrencies by market cap, 17 posted single-day gains in excess of 10 percent against the dollar, and eight rose at least 20 percent.

The day’s most impressive returns did not come from bitcoin, although the crypto patriarch did post a day-over-day increase of four percent. Rather, they came from ethereum, litecoin, and ripple — three altcoin heavyweights that had climbed throughout the year but had been unable to prevent bitcoin from eating into their market shares during the fourth quarter.

Ethereum, the second largest cryptocurrency, rose 24 percent to $634, while Litecoin capped its breakneck rally with a single-day advance of 43 percent that brought its price to a present value of $325.

Source: CoinMarketCap

But while these two coins garnered most of the attention, fifth-ranked ripple quietly mounted a 57% surge, which constituted the best performance of any top 100 coin or token.

The Road to $1 Trillion

There are few people who could have predicted the course that bitcoin and other cryptocurrencies would take in 2017. Last year, for instance, Saxo Bank made the “outrageous prediction” that the bitcoin price would rise as high as $2,100 before 2018.

Now — just one year later — a Saxo strategist believes $100,000 is a “prudent” price target for the next six to 18 months — a mark that would raise bitcoin’s market cap above $1.5 trillion and most likely place the total cryptocurrency market cap well above the $2 trillion mark.

Taking a step back, it’s difficult for many long-term cryptocurrency investors to fathom that a $1 trillion market cap is actually within reach. But while we celebrate the achievement, it’s also important to recognize the obstacles that still await the nascent ecosystem and prepare for the journey that lies ahead.